Adoption of Internet Banking in Kashmir Valley (Benefits of E-Banking and Customer Satisfaction For E-Banking)

International Journal of Emerging Trends & Technology in Computer Science (IJETTCS)
Web Site: www.ijettcs.org Email: editor@ijettcs.org, editorijettcs@gmail.com

Volume 4, Issue 3, May-June 2015
ISSN 2278-6856
Adoption of Internet Banking in Kashmir

Valley
(Benefits of E-Banking and Customer Satisfaction for E-Banking)
Syed Masaid Zaman 1 , Dr. Qamar Parvez Rana 2
1. Ph.D Research Scholar, Department of Information Technology Shrivenkateshwara University Gajraula, Amroha (UP)
India-244236
2. Research Supervisor ,Course Director CCNA Jamia Hamdard (Hamdard University) New Delhi India- 110062
Abstract
The emergence of advanced global information infrastructure
(including information technology and computer networks
such as the Internet and telecommunications systems)
enables the development of electronic commerce at a global
level. The connectivity of world through internet which makes
the world as global village has basically changed the
customers' expectations towards the accuracy, speed, and in
turn, availability, ease, pricing service, and speed of service
have created a competitive advantage for all organizations,
including public banks as well as private banks. These
developments have made a new type of economy, which we can
call the digital economy. The fast emerging digital economy is
bringing with it rapidly changing technologies, increasing
knowledge intensity in all over the business world, and creating
virtual supply chains and new forms of businesses and
service delivery channels such as e-commerce which includes
e-banking. Now a days most of the banking happens while
you are sipping coffee or taking an important call. ATM
services are available at your doorsteps. Banking services are
accessible round the clock. There are more plastic cards in
your wallet than currency notes and some people are now
using mobile phones to transfer the money. A huge part of
this change is due to advent of IT.
Customer satisfaction is the key to market Internet Banking
(IB) services. This paper focus on various aspects regarding
Awareness of IT, benefits of e-banking, services provided by
banks and customer attraction and satisfaction for eBanking.
Keywords:
knowledge.
e-banking,
customer
satisfaction,
IT
1.Introduction
When computers and communications technologies are
combined the result is Information Technology (IT).
Information Technology has become a necessary tool in
all the sectors of the society which is known as ecommerce. The main part of the e-commerce is ebanking. Nowadays Banks operate in a highly globalized,
liberalized, privatized and a competitive environment and
are the backbone of economy of any country. In order to
survive in this environment banks have to use IT tools.
Information Technology (IT) has introduced new
business paradigm. Information Technology is playing
a vital role in improving the services p r ovi d e d by
t h e banking industry. Indian banking industry has
witnessed a tremendous developments due to day by day
changes that are taking place in the information
Volume 4, Issue 3, May June 2015
technology. In Kashmir valley the interest of customers

towards e-banking is also emerging at a rapid rate. But
banks are facing the dual challenge of increasing
penetration and high growth trajectory and also the customer
satisfaction in terms of security and other things which are
running in the minds of customers. Invention of information
technology brought remarkable changes in the banking
industry and the world has become global village. Branch
banking in the brick and mortar mode has been
transformed into click and order channel mode.
Internet Banking is extremely beneficial to customers
because of the savings in costs, time and space, delivery
of improved services and quick response to complaints.
However, the banks face the biggest challenge regarding
the internet banking is the customer satisfaction on the
security it provided (Booz & Hamilton, 1997; Black et.
al., 2002). Deshpande (2002) has identified that
reputational risk, security risk, operational risk, cross
border risk and legal risk as major risks that the
regulators and supervisors should pay their attention.
Furthermore, customers still have a difficult time using
Internet Banking. In many ways, Internet Banking is like
traditional banking. The only percept of internet banking
is that it utilizes a different delivery channel. So, any
decision to adopt IB is normally influenced by a number
of factors (Balanchandher, et al., 2000). They further said
that the emergence of new forms of technology has
created highly competitive market conditions for bank
providers and the changed market conditions demand for
banks to better understand the consumers needs.
E-Banking and its Evolution

E-banking or internet banking is the term that signifies
and encompasses the entire sphere of technology
initiatives that have taken place in the banking industry.
As the name suggests it involves the electronic
technology. The means of technology used in Ebanking are electronic channels which involve
telephone, mobile phones and internet, wh i c h a r e
u s e d for delivery of banking pr oduct s a n d ser vi ces.
The scope and concept of e-banking is still in the
transitional stage. E-banking has broken the barriers of
branch banking.
E-banking came into existence in 1920 in UK and USA.
It became popular during 1960s through electronic funds
transfers and credit cards. This concept of banking
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(internet based banking) came into existence in Europe
and USA in the beginning of 1980s.
E-Banking in India
In India e-banking is of fairly recent origin. The
traditional system of banking was branch banking. In
early 1990s there has been start of non-branch banking
services in India. The old traditional systems on which
Indian Banking depended upon for centuries seem to
have no place today. The credit goes to ICICI Bank,
Citibank and HDFC Bank for launching internet
banking system in India in 1990. Several steps have
been taken by the Government of India as well as the
Reserve Bank of India to facilitate the development of
e- banking in India. The IT Act has been passed by
Government of India in 2000 with effect from October
17, 2000 which provided legal recognition to
electronic transactions and other means of electronic
commerce. The Reserve Bank is responsible for
monitoring and reviewing the legal and other
requirements of e-banking on a continuous basis to ensure
that e-banking would develop on sound lines and ebanking related challenges would not pose a threat to
financial stability.
The payment and settlement system act, 2007 empowers
the Reserve Bank of India to authorize and regulate
entities operating payment systems in the Country and the
vision document for payment and settlement systems of
the RBI has over a period of time and placed importance
on the move towards electronic payments and there by a
Less Cash Society. Feeling the potential of mobile as a
channel for offering financial services in the country, the
Reserve Bank of India issued the first set of guidelines on
mobile banking in October 2008. The model led by
Reserve Bank of India was considered suitable for the
country with a mandate to banks such that all transitions
should originate from one bank account and terminate in
another bank account. The guidelines issued by Reserve
Bank of India in Oct. 2008, permitted banks to provide
the facility of fund transfer from one bank account to
another bank account, both for personal remittances and
purchase of goods and services. All Banks were directed
on the supervisory issues, to ensure technology standards,
registration of customers for mobile banking,
interoperability, interbank clearing and settlement
arrangements for customer grievance, fund transfers and
transaction limits in an attempt to ensure safe, secure
transfer of funds. The IT Vision Document 2011-2017
has been prepared under the chairmanship of Dr. K.C.
Chkrabarty and the members from IIM, IDRBT, Banks
and Reserve Bank of India for Banks and Reserve Bank of
India which provides an indicative road map for
enhanced usage of IT in the Banking Sector.
Indian Commercial banks have changed there strategies
by taking several initiatives to cop up with the pressure of
growing completion, one of them is e-banking. The newly
established private and Foreign Sector Banks were
providing the facilities of e-banking from the beginning
while as there was a tough completion among public
sector Banks. Indian banks provide number of products

and services to their customers some of them are as
under:
Automated Teller Machines (ATMs)
Internet Banking
Mobile Banking
Phone Banking
Tele banking
Electronic Clearing Services
Electronic Clearing Cards
Smart Cards.
Door Step Banking
Electronic Fund Transfer

Credit card
Debit card
Corporate cash Management
SWIFT Banking
Very small Aperture Terminals
Home Banking
E-Banking in Kashmir Valley

In Kashmir Valley E-banking has been started in 1999
and all the credit goes to the Jammu and Kashmir Bank.
Jammu & Kashmir bank is one of the largest banks in
India. The bank has its branches in every major city of
India and outside India. To compete with the other parts
of the country Jammu and Kashmir Bank takes a step to
start E- banking in 1999 by signing the agreement with
IBA to connect its ATMs through a shared network. In
2000 Jammu and Kashmir Bank has tied up with Infosys
Technologies to offer internet banking and for its ecommerce initiatives. Jammu and Kashmir Bank has tied
up with American Express to launch a co-branded credit
card. In year 2001 Jammu and Kashmir Bank has
launched J&K Bank - AMEX Co. Branded Credit Card
pursuant to agreement entered with American Express
Bank. The J&K Bank American Express Credit card
offers high value features which includes balance transfer
facility, global validity, membership rewards and
emergency cash. In 2003 J & K bank has decided to
launch Global Access Card (an International Debit Card)
in association with Master Card International. In 2004
Jammu and Kashmir Bank ties up with ICICI Bank to
share the ATM network. The J & K Bank provides net
banking facility to both corporate and retail customers.
But there is only one requirement to customers to avail all
the e-banking services and facilities that is computer or
equivalent device connected to the World Wide Web.
Benefits of E-Banking
The World Wide Web has permeated virtually every
aspect of modern life. If you have a computer with an
Internet connection, an almost unlimited amount of
goods, services and entertainment choices are at your
finger tips. You can just do about anything online,
including your banking and financial transactions. The
main advantages of E-banking are:
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The cost for operating per unit services is lower for
the banks.
It offers comfort to customers as they are not required
to go to the bank's premises.
The risk of errors is very low.
The customer can withdraw funds at any time from
ATM machines.
The plastic money i.e credit cards and debit cards
enables the Customers to obtain discounts from retail
outlets.
Mobile phones can be used for transfer of funds and
details regarding the accounts.
No geographical barrier for transaction.
It's generally secure. But make sure that the website
you are accessing has a valid security certificate.
Conducting business online is obviously faster than
going to the bank. Long teller queues can be timeconsuming, especially on a Pay Day. But online you
can access your account instantly and at your leisure.
There are so many online services which are
provided by banks to the customers such as loans, tax
payment etc.
Online banking is not only the wave of the future it's also
the wave right now and the clock isn't likely to move
backward. If you will take some reasonable steps to
safeguard your personal and financial information it is
assured that you'll likely find that online banking is a
convenient tool that you can easily live with.
Online banking has become an accepted norm of
monetary transactions for millions in India over the past
decade. Customer can check his account, make payments
online and transfer money between accounts in an easy
way which has made this mode of banking hugely popular
among Indians who are perpetually short of time to visit
the bank physically. Online banking also provides a host
of non transactional features which are quite handy to the
customer. However along with the world of conveniences
this method of banking has a few inherent drawbacks
which need to be understood in order to protect your
money and avoid complications subsequently.
Awareness of IT
World development due to technology growth,
information technology (IT), internet, electronic
government, and electronic business which has derived
from IT, all have made a huge interchange in
communications and data transmission process.
Information technology is the basic need of internet
banking. People should be aware from the IT so that they
can access all the facilities provided by the banks through
Internet banking. People in Kashmir valley are not fully
aware about the internet banking and are not aware of the
information technology. Kashmir valley is still backward

in information technology. It is far behind from the world
in this sector. There are several reasons to these
differences. Some are due to delay in preparation of basic
structures. Basic structure recognition and determination
the present challenges in creation and development of
electronic banking, all will be an appropriate guide for
banks to success. There is a requirement of providing
knowledge regarding IT and an awareness drive
regarding E-Banking in Kashmir. This will make a huge
difference and economic conditions will improve a lot.
Internet Banking Services

E- Banking service has been defined as a web-based
service or an interactive service that is delivered on the
internet conceptualizes e-service as deeds, efforts, or
performances whose delivery is mediated by information
technology. Generally, it can be defined as an interactive
content-centered and internet based customer service that
is driven by customers and integrated with the support of
technologies and systems offered by service providers,
which aim at strengthening the customer-provider
relationship. Given the technology quality dimensions of
e-service quality that are different from the traditional
service context, e-service quality has been regarded as
having the potential to not only delivers strategic benefits
but also to enhance operational efficiency and
profitability.
E-banking provides a number of services at the doorsteps
of customers which is otherwise not possible. These
services are provided through bank websites. E-banking
services are offered to the customers in the form of
internet banking services, phone banking, mobile banking
and ATM services. Internet banking services are provided
to a large extent by all the banks. The most common
services among internet banking are balance inquiry and
transaction history. All the banks are offering these two
services. Apart from these, ATM services are also offered
by all the banks. These include 24 hours access to cash,
transfer fund between accounts, view account balances &
mini statement and pin change option.
Among other services, most of the banks offer simple
transaction of e- banking which includes online transfer
of funds, change password, customer correspondence,
request of cheque book, bill payment, and monthly bank
account statement by e-mail. However, the services like
online tax payments, demonstration of I banking, stop
payment request and corporate internet banking should
also be provided by all the internet banks are having less
adoption in all the banks
Other internet banking services which are less offered
include open fixed deposit and recurring deposit, ticket
booking, demat holdings, loan details, interest rate
updates, share trading, request of debit cards, renewal /
premature closure of FD, mobile top-up, buy and sell
mutual fund, card to card fund transfer, online loans,
send money order anytime, reissue and upgrade of ATM/
debit card, link bank account to ATM/ debit card, convert
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to EMI. All the banks are at different stages of offering
e-banking services so the extent of services is also
different. In order to acquire the new customers as well as
to retain the existing one, banks are very much cautious
about E-banking services. Banks should develop such
kind of services through which customer can transact
from anywhere, anytime. In some of the services like
balance enquiry, transaction history, transfer of funds
online, ATM services; all the banks are offering excellent
services to the customers. Banks are also offering these
services according to their suitability like differentiation
between corporate customers and retail customers. But
such differentiation is only in case of offering internet
banking services. However mobile banking services,
phone banking services and ATM services are offered in
the same manner to all kind of customers. It is
worthwhile to note that banks should encourage existing
and new customers in order to make e-banking services
popular among customers. But all the services are not
offered in the same extent by all the banks. Banks lag
behind in offering the services such as demat holding,
loan details, interest rate updates, share trading, buying
and selling of mutual fund, request for the debit cards etc.
As the electronic banking services are recently started by
all the banks, so banks can expand these services so as to
make the customer more satisfied A part from balance
enquiry, transaction history, ATM services; private sector
banks are offering more advanced electronic banking
services like online shopping, online loans, demat
holding, loan details, mobile top-up, buy and sell of
mutual fund, card to card transfer, mobile banking, phone
banking services to its customers. All the banks are trying
their best to offer electronic banking services, so that
customers can easily cope up with new technology
products.
will meet their requirements accurately. If customer

Expectations are low with banks value added services
than customers may be inclined to consider switching
more frequently. Since latest technologies are being
utilized by the banks but there is still need for
improvement in order to handle and meet with the high
level of customer expectations that directly leads to high
customer satisfaction. If companies handle service,
complaints, and value with the customers in focus, their
expectations can be exceeds. Customer satisfaction is the
degree of fulfillment of perceived expectations and the
actual value added services provided by the banks. Heavy
investments are made to maximize level of customer
satisfaction but only increasing the resources alone cannot
lead to increased levels of customer satisfaction. Thus
there must be other factors leading to improve customer
satisfaction as pointed that customer satisfaction is
achieved through good qualitative and quantitative
services. These qualitative and quantitative services must
meet and satisfy the customer requirements in order to
maximize the level of customer satisfaction that leads to
customer loyalty.
Survey Regarding the Customer Satisfaction

towards E-Banking in Kashmir Valley
The survey was carried out in the major city of the
Kashmir. Customers of the different banks were taken as
the sample unit. Sample size was 300 for the current
research. Self-developed questionnaire was used to get
responses from the respondent. This study is descriptive
in natures and sample units are selected on the
convenience bases.
Customer Attraction and Satisfaction for EBanking

Customer satisfaction is likely to be even more important
online, since it is harder to keep online customers loyal.
In banking, which has traditionally been a high contact
service, the lack of direct human interaction in internet
banking entails the need to examine the role of
technology, shopping, and product factors to construct eCS. Banks must have the knowledge on how to get their
customer satisfied, especially in relation to the e-SQ, and
in internet banking, it shall be prioritized. Many
researchers used different technology approaches or
theories to test the determinant factors that affect
consumers acceptance of information technology
systems. TAM was used as the basis of the theoretical
framework to build a model to determine the internet
banking intention. TAM was introduced by Davis, which
stressed on adoption degree of a person in using a
technology and aspects that affect his or her acceptance or
intention to use the technology.
All banks are striving to capture maximum market share
and do not want to lose. The customer expects that banks
In my survey 77 % was Male customer and 23 % was

Female customer. So we ca n con cl ude t h a t i n
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Ka sh m i r va l l ey bot h m en a n d wom en a r e usi n g
ba n ki n g ser vi ces.
From the above survey which is in table 2 , 61% of

customers are using only one account and 26% people are
using two accounts and only 13 percent are using more than
two accounts. It means that more people prefer only one
account.
From the above table 3 it came to know that there are

43.33% salary account holders and there are only 21.66%
current account holders and there are 35% saving account
holders.
Table 6 Use Of ATM Services

Particulars
YES
NO
PURCHASING
20
220
PAY BILLS
12
228
MOBILE
RECHARGING
240
DEPOSITE
240
CHEACK AC BAL
88
152
WITHDRAWAL
230
10
From the above table we can interpret that 230 customer

used ATM service for cash withdrawal and other usage of
ATM services like purchasing travel tickets, pay
bills, mobile recharging, deposit, check ac bal. So
we can conclude that most of the customer use ATM
debit card services for cash withdrawal.
From the above table it came to know that the total
number of e-banking users is 102 out of 300. So the
awareness amoung account holders regarding the ebanking should be provided by banks, so that the
customers will take full advantage of this great service.
From table 8, out of 102 e-banking users 42 are using the
service of online shopping, 34 are using the service of
pay bills 15 are using the service of mobile recharge and
100% are using the services of cash transfer and check
account balance.
Conclusion
From the above table it came to know that 80% are using
ATM services While as only 20 % are not using from the
sample of 300 people.
From the above table we can interpret that 240

customer used ATM service and from them 50% of
customer has used ATM services once in a week. While
6.25% customers use ATM services once in a month. So
we can conclude that most of the customers used ATM
service at least once in a week.
In this study I have discussed different aspects of ebanking such as e-banking and its evolution, e-banking in
India, Benefits of e-banking, e-banking in Kashmir valley
, awareness of IT, Internet Banking Services and the
overall perception of customers regarding the services of
e-banking. Age and occupation are the important
demographic factors in the banks which have used to
measure the perception of the customers on e-banking
services.
The study concluded that different age groups of
customers have different perception toward the e-banking
services and the usage level of these banks. Customer is
different so banks should concentrate on all the age group
of customers for betterment of e-banking. It has been
recognized that different occupation and age group of
customers have different perception toward the e-banking
services. There are good number of customer in every
group like student, business class, service class and
professionals, it shows that they all are keen interesting in
using the e-banking services.
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Web Site: www.ijettcs.org Email: editor@ijettcs.org, editorijettcs@gmail.com